Reduce What You Owe with these Simple Debt Management Strategies
Given the current economic scenario in the country, it is becoming extremely commonplace to find people who are struggling under the burden of a massive debt that is hard to get rid of. A major chunk of the households has at least one major debt such as a home mortgage, a personal loan, a credit card or a student loan that is constantly adding up and becoming increasingly difficult to deal with. The one thing most people under a debt are constantly trying to determine is the way to reduce the amount owed and release some of their financial stress. To make things easier for you, we have compiled a list of debt management strategies by which you can reduce what you owe and manage your debt more efficiently. Have a look.
Analyze your debts
First and foremost, you must create a list of all the debts that you owe and jot down the various important details such as the outstanding balances, interest rates, the name of the lending company and so on for each of them. Once you actually know how much you need to pay to each of the creditors, you will be able to devise an efficient plan to manage your debt in an informed manner. Once you have done that, your next step will be to approach your creditors and try to renegotiate the repayment terms with them to suit your requirements.
Consolidate your debt
If you are finding it extremely difficult to keep track of your multiple debts, then taking out a debt consolidation loan will probably be your best bet. Consolidating your debt will imply that now you have to make only a single payment in lieu of the multiple installments that you were taking care of earlier. Since now you would have to keep track of only one payment, it will be easier for you to keep up with your repayment schedule and also build your credit rating in the process. Also, debt consolidation might lower your interest rates and significantly cut down on the amount owed in the long term.
Prioritize your payments
An effective way of reducing your debt in a short duration is paying a minimum required amount for all your dues except for the most expensive debt that has the highest rate of interest. Prioritize the costliest debt and contribute a major chunk of your monthly payment towards this debt to ensure that you get rid of it first. Once you are done with it, focus on the second highest debt and continue to follow this trend until you are clear of all that you owe.
File a bankruptcy
When nothing is going your way and your debt is spiraling out of control indiscriminately your last resort should be to file a bankruptcy. Both chapter 7 and chapter 13 bankruptcies will help you manage a major chunk of your debt and get back on your feet with a clean slate.
Most importantly, try to lower your monthly expenditures and prioritize your debt repayments as the most important part of your finances. It always helps to not add on to your existing debt unless it becomes affordable enough for you to deal with, without any external assistance.